Signs a Debt Is Worth Pursuing
Not every debt justifies the effort. Here are the practical signs that a commercial debt is worth pursuing — and the red flags that it may not be.
In this guide
- Identify positive signs that a debt is worth pursuing
- Recognise red flags that pursuit may not pay off
- Weigh documentation, solvency, and amount together
- Help clients triage their overdue accounts
- Know that referral is low-risk under a contingent model
6 min read
Encouraging signs
Several features suggest a debt is worth pursuing. A debtor that is trading and appears solvent can actually pay. A clear, undisputed debt backed by solid documentation is straightforward to establish. A meaningful amount justifies the effort. And a debt that is still relatively fresh has not yet been eroded by time or overtaken by other creditors. When these align, pursuit is usually well justified.
- Solvent debtor
- There is money there to recover.
- Clear documentation
- The debt is easy to establish and hard to dispute.
- Reasonable amount
- The likely return justifies the effort.
Red flags
Other signs counsel caution. A debtor with no apparent assets, or one already showing signs of insolvency, may be unable to pay whatever pressure is applied. A genuinely disputed debt may need resolving before anything can be collected. Very old debts raise timing concerns. And thin documentation makes a debt harder to establish. None of these is necessarily fatal, but together they lower the odds and should temper expectations.
Weighing it up
Rarely is a debt all green lights or all red flags; usually it is a mix. The practical task is to weigh the factors together: a substantial, well-documented debt against a solvent debtor is clearly worth pursuing, while a small, old, poorly documented debt against an asset-less debtor may not be. Helping a client triage their overdue accounts this way focuses effort where it will actually pay off. The economics are covered in the economics of recovery.
Low-risk by design
One feature of a commission-only model is that the threshold for “worth a try” is lower, because the recovery fee is contingent on success and there is no large upfront cost. A borderline debt that would not justify paying lawyers in advance can still be worth referring. When in doubt on a current debt, a client can simply refer a debt and let a review gauge its prospects.
Key takeaways
- A solvent debtor, clear documents, and a meaningful amount are good signs.
- No assets, genuine dispute, age, and thin records are red flags.
- Most debts are a mix — weigh the factors together.
- Triaging overdue accounts focuses effort where it pays off.
- A contingent model lowers the threshold for trying a borderline debt.
Frequently asked questions
What makes a debt worth pursuing?
Broadly: a solvent debtor who can pay, clear documentation, a meaningful amount, and a debt that is still relatively fresh.
When might a debt not be worth chasing?
When the debtor has no assets or is insolvent, the debt is genuinely disputed or very old, or the documentation is thin. These lower the odds.
What if a client is unsure?
Under a commission-only model the threshold for trying is low. A borderline current debt can be referred so a review can gauge its prospects.
Add real value for your clients
Refer your clients' overdue debts and we recover them commission-only — you stay the trusted adviser.